no smokingThe Belgian government proposed an hilarious tax two months ago. Short term profits will be taxed (33%) for retail investors. Losses aren’t taken into account. The idea is the capital markets are bad, just like smoking or alcohol.

Slowly, details emerge. All exchange traded instruments are assumed to be within the scope of the tax. It is confirmed CFD’s (like from IG) are exempt, because not traded on exchange. Also exempt seem to be ETF’s (nice for Flow Traders).

Brussels option market at risk

Brussels has an option market, but under the proposed tax it is finished. There seems to be a lack of basic option understanding at the government in Brussels. Taxing only the winning options makes no sense.

Let’s assume, for the sake of the argument, you buy a simple call spread with strike 12 (long) and 14 (short). Stock goes through the roof, to €100. Well done, your spread will be worth €2. Taxman wants to collect €26,40. That happens when you ignore losing legs in a spread.

ABN options at EUREX

Eurex was a bit late to the party. ABN AMRO options are introduced today under code AAR. This means the same options are traded on three option exchanges. While Euronext still has the ABN options categorized as spotlight options with only the first three months – they will be promoted to regular options. This means there is space for six “primary market makers” on Euronext.

Crowded options

Currently there are seven pmm‘s. One needs to go. Not such a big deal, but curious to see who needs to give up some capacity and join Commerzbank as “competitive market maker”.

  • Scrocca
  • 323
  • Webb
  • Susquehanna
  • IMC
  • Optiver
  • Nino

I expect Optiver to be dropped from the list of PMM’s. The reason is Euronext is taking into account the number of alternative liquidity providing roles each firm is maintaining. And Optiver is only involved in the few large cap stock options (bigger fish to fry).

Johannah Ladd to leave FIA EPTA

After two years at the helm of the HFT lobby group FIA EPTA, Johannah Ladd will leave on January 1st. She has concentrated efforts against a proposed financial transaction tax and the impact of strict bank-like reg cap rules for prop trading firms. She also helped to make sure MiFID II’s market making provisions won’t cripple liquidity providers. With her legal background (Flow Traders) and communication skills she’ll be a good catch for any financial institution. Tough she may risk her place on the list of “100 most influential women in finance”. She was on the list in 2014 and 2015.

Ms. Ladd was also interviewed in an article on the Dutch market in Automated Trader (ah well, me too). Here’s the interesting interview, in a large 5mb PDF. Here’s the official press release from FIA EPTA.

Euronext and Virtu to appeal against fine

The French regulator gave both Euronext and Virtu a €5 million penalty for something they did in 2009. They both intend to fight it. But what exactly has been the problem? My French is mediocre, but Alexander Laumonier dived into the issue. See his good read “The tourist of Euronext“.